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If one makes some short-term capital gain within one's pretax 401(k), does it make any financial difference compared to making long-term capital gain?

Personal Finance & Money Asked on July 9, 2021

If one makes some short-term capital gains/losses within one’s pretax 401(k), can this make any financial difference now or anytime in the future compared to making long-term capital gains/losses?

One Answer

401k is only taxed when you withdraw funds (which you shouldn't until you are 55 years old).

Any withdrawal is taxed as compensation income, regardless of how long the money has been sitting there. Long term or short term gains don't apply to 401k.

Correct answer by Hilmar on July 9, 2021

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